I guess #4 is a problem. Can you teach him somewhere else, away from work? Otherwise, start soundproofing a storage room...
You can just tell him your concerns regarding your inexperience if you like, and don't charge him if you think you're not deserving income. But since you've played classical for years, there's surely some knowledge that you can pass on to a beginner. There's probably things you could teach me, and I've been doing it for a loooong time!
Busy schedule, well there's no getting around that. That's why I don't teach anymore.
If you want to learn how to teach, you'll have to give a first lesson at some point. I learned a lot from my students over the years.
As far as the jam session competition goes, it will be awhile before a beginner will be playing at the level you're most likely at already, unless he's a prodigy in the making. I've learned that a healthy community of players and peers is a good thing, and it's important to remember that there is always someone "better" than you right around the corner. Maybe you can show him the ropes, and then let him jam on a tune or two when he feels ready.